Regeneration of craniofacial and skeletal bone defects has widely been achieved with bone grafting procedures. The literature suggests that there are more than one million cases of skeletal defects a year that require bone-graft procedures. Autologous bone has been considered the gold standard for bone augmentation. However, there are several disadvantages associated with this modality of treatment. The ability of stem cells to give rise to multiple specialized cell types along with their extensive distributin in many adult tissues have made them an attractive target for application in bone tissue engineering. Dental MSCs are attractive postnatal stem cells with self-renewal and multilineage differentiation capacity having superior osteogenic properties in comparison to bone marrow mesenchymal stem cells (BMMSCs). The central hypothesis of this proposal is that alginate-based drug delivery system regulates the cross-talk between immune cells and dental MSCs in bone regeneration. It is hypothesized that these interactions are crucial in the osteogenic lineage commitment of dental MSCs. This proposal tries to find answers for a very important and unanswered question: what is the role of the microenvironment (biomaterial) in the interplay between MSCs and immune cells in the fate determining and osteogenic differentiation of MSCs. The validity of the central hypothesis will be tested by determining: 1) the role of biomaterial in the interplay between immune cells and dental MSCs in MSC-mediated bone regeneration, using different inflammatory cytokines (e.g. IL17, IFN-?, TNF-?, and M-CSF), and different immune cell (e.g. Th1, Th17, Treg, and macrophage) via in vitro and in vivo studies; 2) the immune-protective effects of biomaterial on survival and viability of dental MSCs using immunofluorescence staining (Annexin V for apoptotic pathway and LC3 for autophagy); 3) the possibility of development and characterization of a novel MSC microencapsulation system based on alginate containing anti- inflammatory drug (indomethacin) for improved bone regeneration. 3D injectable model with the ability of site- specific pharmacological treatment will be developed to test the role of biomaterial in the interplay between immune cells and MSC in bone regeneration. This proposal will provide a novel injectable and biodegradable scaffold for encapsulation of dental MSC, presenting an innovative treatment modality for bone regeneration with therapeutic properties to manage local inflammatory reactions.